Xiaomi Posts 43% Profit Plunge as EV Losses Widen, Bets on Hybrid Family SUVs

The contrast between ambition and reality at Xiaomi has rarely been starker. A 43 percent collapse in adjusted net profit during the first quarter of 2026, combined with deep losses in the electric-vehicle division, has pushed the stock to within cents of its 52-week low. In response, the company is executing a radical strategic U-turn: it is launching a new sub-brand of range-extender hybrid SUVs to court families, while unveiling a fresh AI model and flagship smartphones to shore up its core tech business.

Revenue for the January-to-March period slid to 99.1 billion yuan, down nearly 11 percent from a year earlier, as higher memory-chip prices, fiercer smartphone competition, and relentless EV spending squeezed the bottom line. Adjusted net income came in at 6.1 billion yuan, halving from the prior year. The smartphone and AIoT segment held relatively steady with a 22.5 percent margin, but the EV arm remains the main drag. Although the car business generated 19.9 billion yuan in revenue, it booked an operating loss of 3.1 billion yuan — a stark reversal from the brief profit it posted in the same quarter a year ago.

That loss is driving a rethinking of Xiaomi’s automotive strategy. Until now the company focused solely on pure-electric sedans, but it has now secured regulatory approval for a family of range-extender vehicles. Under a newly created sub-brand called Skynomad, the first model — internally codenamed Kunlun N3 — is a large SUV slated for the second half of 2026. It will offer a pure-electric range of up to 500 kilometers, with a small gasoline engine acting as a generator to soothe range anxiety. Xiaomi plans to undercut established rivals aggressively, pricing the Kunlun N3 roughly 200,000 yuan below comparable offerings.

The pivot comes as delivery numbers fall well short of an ambitious annual target of 550,000 vehicles. From January to May, Xiaomi handed over only about 140,000 to 150,000 units — representing mere 13.5 percent growth. May saw a month-on-month contraction, and the YU7 model’s sales tumbled from 37,869 in January to just 9,876 in April. While domestic deliveries surged 71 percent month-on-month to 36,702 in April and edged back above 30,000 in May, the volatile rhythm underscores just how steep the climb to the year-end goal remains.

Should investors sell immediately? Or is it worth buying Xiaomi?

On the financial side, management has rolled out a fresh buyback program authorizing the repurchase of up to 20 billion Hong Kong dollars’ worth of Class-B shares over the next twelve months. That follows an earlier scheme under which Xiaomi had already bought back roughly 399.6 million shares for nearly 14.6 billion Hong Kong dollars. Yet the stock has shrugged off the signal, closing at 2.89 euros — barely above its 52-week nadir of 2.82 euros. The shares have shed more than 35 percent since the start of 2026 and are down roughly half over the past twelve months. According to Bloomberg, bearish positions in Xiaomi equity and derivatives had climbed to a record high ahead of the earnings release, amplifying the downward pressure.

To counter the headwinds, Xiaomi is also flexing its tech muscles. On June 9 it unveiled the MiMo-V2.5-Pro-UltraSpeed, an AI model that claims to process over 1,000 tokens per second on eight standard GPUs without requiring proprietary hardware. An API trial runs until June 23. A day earlier, the company introduced the 17T and 17T Pro smartphones in China, packing a 7,000 mAh battery, 100-watt charging, and MediaTek’s Dimensity 9500 chip.

Whether these product launches can offset the strain from the EV business depends on how quickly the new Skynomad SUV ramps up deliveries in the second half and whether component costs finally ease. Xiaomi must prove it can win over families, not just tech enthusiasts — and that it can execute its latest ambitious plan without further missteps in China’s brutal price war.